Malware from Pirated Software Costs Billions, Study Finds

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Think you can afford to skimp on your software purchases?
Microsoft disagrees.

A new report issued on behalf of the company claims the malware
that often accompanies pirated and counterfeit software will cost
the world an estimated $114 billion this year.

According to " The Dangerous World of Counterfeit and Pirated
Software," a Microsoft-sponsored report compiled by
Framingham, Mass., market-research firm International Data
Corporation, consumers and businesses who opt out of buying
legitimate software products run a high risk of malware
infection.

"For consumers, it is not just lost time and money to fix the
problem, but also the risk of lost data and identity theft," the
report says. "For enterprises and governments, it is time and
money better spent on other things, lost business and reputation
from data breaches, and threats to critical infrastructure."

Running the risks

The report was partly based on tests of 533 Web-based sources of
pirated software, including peer-to-peer (P2P) networks,
download sites and pirated-software DVD markets.

The study found that 36 percent of downloads of pirated software
lead to
malware infection in the form of viruses, Trojan horses,
keystroke-capturing software, authentication backdoors and
spyware.

More than 2,000 people in 10 countries were interviewed, split
almost evenly between consumers and business users.

For the purposes of the study, pirated software was defined as
"improperly licensed or not licensed at all." Counterfeit
software was defined as a subset of pirated software that is
"deliberately presented as genuine when it is not."

The report also delves into the sketchy realm of pirated software
CDs and DVDs. Thirty percent of the 155 pirated-software disks
tested simply didn't work or contained the wrong files.

Of the 70 percent that did work, 15 percent contained malware
that infected the testers' virtual PCs. Fourteen percent needed
installation keys downloaded from the Web, and these resulted in
yet more malware infections.

Though the report lacks specific data as to who exactly is
producing all of this illegitimate merchandise, the research does
cite "individuals, small teams of hackers, giant shadowy
enterprises like The Pirate Bay and major piracy syndicates" as
sources of counterfeit and pirated software.

There was reportedly even a major
Mexican drug cartel that sold pirated-software CDs stamped
with its own logo.

The report included some caveats, especially when compared to a
similar study IDC conducted in 2006.

The proportion of websites that tried to infect IDC's computers
fell from 25 percent to 14 percent since the previous study; the
proportion of CD and DVDs containing malware fell from 33 percent
to 14 percent.

"Street-market pirated software is getting better — more
functional and cleaner — but also harder to find in more and more
countries," the report said. "For instance, in 2006 there was no
problem finding counterfeit CDs/DVDs in Russia; this time we
didn't find enough to test."

Damage estimates

The damage done by these products can be measured monetarily,
according to IDC.

The report estimates that malware installed along with pirated
software on individual and business PCs causes approximately 1.5
billion hours' worth of maintenance to fix.

From that estimate, IDC came up with a price tag of $114 billion
as the total cost related to pirated software for individuals and
enterprises across the globe.

The Microsoft-funded report concludes that those who choose to
run counterfeit or pirated software have a one-in-three chance of
inadvertently installing malware on their computers.

Despite the implied bias of a report sponsored by the biggest
name in software, those who want to keep their data safe from
scammers, hackers and other ne'er-do-wells should heed the
company's warning to avoid software from illegitimate sources.